How to Limit your Liability
And understanding Co-ownerships
How to Limit your Liability
As a flying enthusiast, you will be faced with
many important decisions, including how to
protect your personal and business assets
from lawsuits.
While many countries allow the typical structures
of sole-proprietorship, partnership, or
corporation for business ownership, Americans
have the ability to form a limited liability holding
company.
What is a Limited Liability Co.
 A limited liability company (LLC) exists as a
separate entity and blends elements of
partnership and corporate structures where
owners are called members not partners or
shareholders.
 The number of members are unlimited and
may be individuals, corporations, or other
LLC's.
 A LLC Members cannot be held personally
liable for the companies liabilities or debts
unless they have signed a personal guarantee.
What is a holding company?
 A holding company is a company that
doesn’t have any operations, activities, or
other active business.
 Instead, it owns it stockholders assets
and assumes all the liability of ownership.
These assets can be aircraft, limited
partnerships, or virtually anything else
that has value.
Purpose
 Protecting personal assets by Limiting your
liability to the value of the aircraft.
 Let the holding company, as owner, assume
the risk when it is time to sell the aircraft.
 Provides future partners a holding company to
invest in a state-of-the-art aircraft at a fraction
of the cost.
 Allows Members to transfer their ownership as
easily as transferring a share of stock.
Incorporation
 All states are not equal!
 Why Incorporate in Nevada?
 Nevada, like the state of Delaware, is well
known as a corporate haven.
 Hard to pierce the corporate veil and sue a
stockholders, members, or officers.
 No Corporate Income Tax
 No Taxes on Corporate Shares
Why Incorporate in Nevada?
 No Franchise Tax
 $325.00 to $950.00 total annual expenses
 Nevada corporations may purchase, hold, sell
or transfer shares of its own stock.
 Nevada corporations may issue stock for
personal property like aircraft.
 No Estate Tax
 Competitive Sales and Property Tax Rates
Why Incorporate in Nevada? ...2
 Nevada's Business Court minimizes the
time, cost and risks of commercial
litigation by:
 Early, comprehensive case management
 Active judicial participation in settlement
 Priority for hearing settings to avoid
business disruption
 Predictability of legal decisions in
commercial matters
How to incorporate in Nevada.
 Required documents:
 Articles of Incorporation filed with the
Secretary of State. Cost $75.00.
 Business License. Cost $200.00 annually.
 List of Officers. Cost $125.00 annually.
 A Nevada Resident Registered Agent
is required if you are not a resident.
Cost $89.00 to $200.00 annually.
How to incorporate in Nevada. ...2
 Officers/Directors Information
 Minimum number: Corporations are required to
have one or more directors as well as a
president, secretary and treasurer.
 Director qualifications: Directors must be at
least 18 years old.
 Appearance in articles: Required. Directors'
names and addresses must appear in the
Articles of Incorporation.
How to incorporate in Nevada...3
 Annual Reports
 Corporations must file an Annual List of
Officers, Directors and Registered Agent and
Business License Application with the Nevada
Secretary of State on or before the last day of
the month that marks the anniversary of
incorporation as well as federal tax returns.
 A valid Nevada corporate address with mail
forwarding must be acquired if not a
resident. Cost $120.00 to $250.00 plus
postage.
Potential Alternatives to setting up
an LLC Holding company yourself.
 Do an online search and you will discover there
are hundreds of companies like LegalZoom
that will do everything from being the
registered agent to scanning your mail and
forwarding it to you electronically.
 The difficult part only becomes finding the reputable
service for the cheapest price.
 Or buy stock in an existing holding company
sharing the cost with others who use and
control their own aircraft separately from you.
Recommendation
 Transfer, in exchange for stock, all assets that
have liability associated with there use into a
Limited Liability Holding Corporation.
 This will protect your companies, chapters,
members and your personal assets.
 Consider it very inexpensive yearly insurance
worth exactly what you are worth today and in
the future.
An Alternative Solution
 Rotorcraft Partners LLC Co is, or soon will be,
a Nevada bases Limited Liability Holding
company created to hold title in individually
owned or co-owned aircraft protecting our
members personal assets.
 Rotorcraft Partners LLC Co purchases your
aircraft in exchange for stock then creates an
exclusive use agreement with you or all your
co-owners of the aircraft allowing them the
same possession and control as if they still
owned the aircraft.
Rotorcraft Partners LLC Co.
 Each Aircraft has a stand alone
agreement which creates a limited
partnership with the owner or co-owners
of each aircraft separately from the other
aircraft the company owns.
 Rotorcraft Partners LLC Co allows all the
owners to share the cost, labor and
hassle of incorporating a Limited Liability
Company on their own.
Ownership Structure
 Example: 3 aircraft owned by the holding
Co with 2 limited partnerships, 7
members & 54 co-owners.
R o to rcraft P artn ers L L C C o .
A n A sset H olding com pany
A ircraft N 2279D
A ircraft N 7149W
A ircraft N 2057M
P artnership
M em bers
O w ner M em ber
P artnership
M em bers
C h ap ter 31
Mr A
C h ap ter 2
X Y Z C o rp o ratio n
Mr X
ABC LLC Co.
Mr X
To limit liability all Aircraft
are owned by LLC Co.
 This aircraft is for Mr X's exclusive use with
100% possession, use and control. He also coowns another aircraft with a corporation as his
partner.
R o to rcraft P artn ers L L C C o .
A n A sset H olding com pany
A ircraft N 7149W
A ircraft N 2057M
O w ner M em ber
P artnership
M em bers
Mr X
ABC LLC Co.
Mr X
Multi-Chapter and partner
owned Aircraft.
 This co-owned aircraft has 4 entities that are
members of Rotorcraft Partners LLC Co.
 Chapter 31 has 16 members, Chapter 2 has 28
members and XYZ LLC Co. has 10 members
for a total of 54 co-owners/ users of this
aircraft.
R o to rcraft P artn ers L L C C o .
A n A sset H olding com pany
P artnership
M em bers
A ircraft N 2279D
C h ap ter 31
Mr A
C h ap ter 2
XYZ LLC Co.
Is there a need for co-own aircraft?
 If it is hard for you to get gyroplane training as it is in
CA then yes!
 Our sports problem is we often have willing gyroplane
CFI's however, our market is just too small for them to
afford to buy a $30K+ training gyroplane and make a
living for their family so most new and old members
have to travel. Each chapter could be a point of
training.
 We can make it profitable for anyone to become a CFI
if the Chapters or PRA co-owned a trainer for local or
traveling instructors at a reduced usage rate to all coowners, only paying for the instructors time.
We can make it affordable for
young families to play again.
 In the old days you could build a gyrocoper for only a
few hundred dollars. Today, for a state-of-the-art
gyroplane it cost $15K for a true ultralight, $18K to
$25.K for a single and from $30K to over $100K for a
two-place where motorcycles and watercraft cost less.
 By being able to setup up LLC co-ownership for your
chapter members you can advertize for new members
to co-own the same model aircraft other members wish
to own with 4 gyroplane co-owners @ $15K = $3,750.
ea., @ $20K = $5,000. ea., @ $100K = $25,000. ea..
How do we co-own, share and pay
for the use of experiential Aircraft?
 Let's examine the purchase, use, and
billing of one of our co-owned example
Aircraft N2279D assume it will be a twoplace gyroplane and not built yet.
A ircraft N 2279D
P artnership
M em bers
C h ap ter 31
Mr A
C h ap ter 2
XYZ LLC Co.
Co-owners may own and
fly Experimental aircraft.
 Chapter 31 is located in CA. Chapter 2
is located in Utah and they decided to
share and build a two-place
trainer/cross-country gyroplane. This
will allow all of their members to be COOWNERS.
P artners hip
M em bers
C h ap ter 31
Mr A
C h ap ter 2
XYZ LLC Co.
 Chapter 31 has the engine, Chapter 2 has the avionics
and blades. Both chapters advertized for new members
& investors/ partners. Mr A is a member of Chapter 31
and has paid for ½ of the frame kit and Chapter 2's ad
found a new member who owns an LLC and will loan us
the money to pay for the rest of the frame kit.
How can you pay back investors?
 All four partners are loaning each other
either money or material, parts & avionics
to acquire a completed aircraft for the
partners and co-owners mutual benefit.
P artners hip
M em bers
C h ap ter 31
Mr A
C h ap ter 2
XYZ LLC Co.
 Remember, there are 54 co-owners that belong to the
Chapters and LLC and only 4 partners that we all owe
for loaning the other co-owners the money to complete
the aircraft.
 All co-owners including partners will repay themselves
and expenses with an hourly usage charge much like
an FBO leaseback.
Co-owners Pay for what they use.
 The hourly usage charge is to assure that the
co-owner who flies the most pays the most of:
 Loans, and loan repayment to partners
 Hanger, insurance, expenses, maintenance, engine
reserves, fuel, oil, and other operating costs.
 No commercial use assures that co-owners
only pays the actual cost at an hourly low rate
as co-owners are paying only for loans and
expenses as they use the aircraft.
What's the yearly Cost?

Example of yearly fixed costs and loan payments:
1)
2)
3)
4)
5)
6)
7)
$5,142.85 = Aircraft ($36K / 7 yrs) for partner loans.
$6,200.00 = Insurance
$ 500.00 = Storage Enclosed Trailer ($3.5K / 7 yrs)
$ 600.00 = Annual Inspection
$1,800.00 = Parts maintenance reserve @5%
$ 220.00 = Taxes
$14,462.85 = Total Annual Fix cost
The more it flies the
cheaper the rate.
 Total Annual Fix cost $14,462.85 is then divided by 12
months = $1,205.24 Fixed costs per month.
 If the aircraft files only:
 4 hours per day on weekends or 8 hours for 4 weeks equals
32 hours per month = $37.67 per hour.
 50 hours per month = $24.11 per hour.
 If flown 4 hrs per day for 120 hrs = $10.04 per hour.
 It makes sense to co-own the aircraft with PRA or other
Chapters as the more it files the cheaper it is for all.
Once the partners are paid back
the price goes down again.
 Total Annual Fix cost are reduced to $8,820.00
divided by 12 months = $735.00 Fixed costs
per month.
 If the aircraft files only:
 4 hours per day on weekends or 8 hours for 4
weeks equals 32 hours per month = $22.97 per
hour.
 50 hours per month = $14.70 per hour.
 If flown 4 hrs per day for 120 hrs = $6.12 per hour.
 It should be noted that these are dry cost
meaning without fuel and oil costs.
How are the investor partners repaid?
 The user rates will vary depending on the number
hours flown and the number of years the partner coowners request to be paid back in.
 The user charges are collected after each flight. Funds
are then sent to the accounting partner/ co-owner who
pays the monthly expenses and then distributes the
excess to the partners each month to repay them for
their loans.
 If the funds collected are less than expenses the
partners will loan us the money by paying the
expenses adding it to the amount we owe them.
How are the investor partners repaid?...2
 For this example let's assume the ownership is:




Chapter 31 = 22% Contributed engine
Mr A
= 32% Contributed 50% gyroplane kit
Chapter 2
= 14% Contributed blades, & avionics
XYZ LLC co = 32% Contributed cash
 Therefore each month 22% of loan and excess will be
paid to Chapter 31, 32% to Mr A, 14% to Chapter 2,
and 32% paid to XYZ LLC co until they are paid in full.
 Once paid all co-owner's rate per hour will be reduced.
How is possession shared.
 Each Partner/ Investor co-owner has the right to
possession but NOT exclusive use of the Aircraft for
the same percentage of the days in a year, less
maintenance down time, as the Partner's beginning
Loan balance.
 Example 365 days less 7 days maintenance down time
would mean in this case Chapter 31 @ 22% = 78 days,
Mr A @ 32% = 114 days, Chapter 2 @ 14% = 50 days,
ZYZ co @ 32% = 114 days.
 All co-owners would be able to fly it no matter where it
was located including all fly-ins.
What this can mean for PRA
Chapters and Co-Ownerships.
 An LLC is a powerful tool that could be used to rapidly
expand PRA and or your Chapter allowing them to
purchase, build, or donate a aircraft into the Limited
Liability Co as a separate entity to hold title, thereby
limiting your risk to only the amount you have invested
in the aircraft.
 Having an inexpensive gyroplane that all members can
fly is a major benefit and inducement to join in the fun
and provides young families an inexpensive way to
earn their wings and enjoy the thrill of flight.
What this can means for PRA
Chapters and Co-Ownerships...2
 Using the co-owned aircraft's availability and
training to new members a marketing
advertizing campaign to recruit new co-owners,
investors, PRA and or Chapter members can
be used to increase your membership
dramatically.
 You can create limited partnerships between
current and new chapter members to purchase
aircraft models they wish to own independently
from the Chapter at a fraction of the cost
making it affordable to more members.
What this can means for PRA
Chapters and Co-Ownerships...3
 Shared ownership with other Chapters or
PRA the cost per hours would go down
with the increase usage and it could be
moved around the country with states
where it snows, and not being used
anyway, using it in the warmer months
and year round good weather states
having possession during the winter
months.
What can you do?
 You can encourage PRA and or your Chapter
to become a co-owner of Chapter 31's twoplace trainer providing a training aircraft across
the country to all our members at a reduced
cost.
 You can become the investor/ partner providing
the funds for your Chapter to co-own an aircraft
bringing new people into the sport.
 You can become a co-owner with other
members of your chapter who wish to own the
same model gyroplane .